The Nickel Report

As we have reported previously in this blog, in March 2021, the Massachusetts Governor signed historic climate legislation designed to effectuate the Commonwealth’s goal of net-zero emissions by 2050 (Chapter 8 of the Acts of 2021 or the “Act”). Some of the more controversial items in the Act were the provisions to incorporate requirements into the state’s building code to advance construction and/or retrofitting of buildings with energy systems designed to reduce emissions. In general, the efforts to facilitate a transition away from fossil-fuel energy systems in buildings continue to prove difficult as existing programs and policies are not necessarily designed to prompt the shift away from traditional energy systems at the pace that some argue is required to meet the aggressive emission targets of the state goals.

In an effort to prompt a more rapid transition, three Massachusetts lawmakers introduced legislation titled “An Act Sparking the Modernization of State Heating Systems” (H.2343/S.2014 aka the “Spark Act”), which would require public building designs for net-zero operations and amend state building codes to mandate that structures have the capacity for future use of electric appliances, utilities, and vehicles. Although prior, similar legislation has failed to become law, the recent legislative and executive actions of the Commonwealth may signal a new opportunity for passage.

While these legislative efforts are pursued, the agencies in Massachusetts charged with implementing the Act pursue the mandated processes to propose regulatory changes to achieve its net-zero emissions goals of the Act. For example, under Section 101 of the Act, the Massachusetts Department of Energy Resources (“DOER”) must promulgate the municipal opt-in specialized stretch energy code “not later than 18 months after the effective date” of the Act.

Proposed standards for the updated Stretch Energy Code have yet to be seen.  A recent example that may serve as a model for the DOER was promulgated on the West Coast by the California Energy Commission (“CEC”). On August 11, 2021, the CEC adopted the 2022 Building Energy Efficiency Standards (“California 2022 Energy Code”) for newly-constructed and renovated buildings. In what has been characterized as a first of a kind standard, California’s 2022 Energy Code (1) encourages electric heat pump technology for space and water heating, (2) expands solar and battery storage standards, and (3) adopts electric-ready requirements for single-family homes.  In comments on the Code’s passage, one of the California CEC commissioners stated that the Code "pivots California’s buildings toward the clean, low-carbon technologies that are the bedrock on which our collective path forward will rest. This foundation will help the state meet its critical long-term climate and carbon neutrality goals."

California’s 2022 Energy Code update focuses on four key areas for new construction of homes and businesses:

• Encouraging electric heat pump technology and use;
• Establishing electric-ready requirements when natural gas is installed;
• Expanding solar photovoltaic (PV) system and battery storage standards; and
• Strengthening ventilation standards to improve indoor air quality

The California 2022 Energy Code was issued following a public comment process, and the updates revise energy efficiency standards for newly-constructed buildings, as well as for additions and alterations to existing buildings.  Key highlights of the 2022 Energy Code include the following:

1. The Encouragement of Heat Pump Technology: Heat pumps are an electric technology for water and space heating that increases efficiency, reduces GHGs, and enables load flexibility. California’s 2022 Energy Code Standards include:
   • Single-family homes — heat pump water or space standard.
   • Multifamily homes such as apartment buildings — heat pump space heating standard.
   • Businesses — heat pumps standard for schools, offices, banks, libraries, retail, grocery.
2. New Homes to Be Electric-Ready. California’s 2022 Energy Code Standards require single-family homes to be electric-ready, including:
   • Electrical circuits for space heating, water heating, cooking/ovens, and clothes dryers.
   • Electrical panel, branch circuits, and transfer switch for battery storage.
   • Dedicated circuits and panels to easily convert from natural gas to electric in the future.
3. Solar and Storage Use Expanded California’s 2022 Energy Code extends solar and introduces battery storage standards to the following building types:
   • High-rise multifamily (apartments and condos)
   • Hotel-motel
   • Tenant space
   • Office, medical office, and clinics
   • Retail and grocery stores
   • Restaurants
   • Schools
   • Civic arenas (theaters, auditoriums, and convention centers)

It is estimated that a third of the GHG emissions in Massachusetts come from buildings. Whether DOER will take similar measures to those adopted by California remains to be seen. As these states have enacted similar GHG reduction targets, it is quite conceivable that Massachusetts may pursue similar initiatives in its update to the Stretch Energy Code. Regardless of how they are finalized, transformative standards similar to those passed in California implicate many economic considerations, as well as the environmental policies against which they are balanced, such as considerations of environmental justice. As a result, these developments are sure to receive significant attention from numerous stakeholders, the public, and representative sectors of the Commonwealth’s economy as they are pursued.